SMFG weighs acquiring Asia banks to use some of $12 bln surplus capital

TOKYO, Dec 26 (Reuters) - Sumitomo Mitsui Financial Group (SMFG) wants to acquire Asian commercial banks, utilising some of the up to $12 billion in surplus capital that Japan’s third-largest lender expects to build up over the next five years, its chief executive said.

“In Asia, we would like to do full banking services including retail business in countries with economic growth potential,” Takeshi Kunibe said in an interview.

SMFG has been trying to build a bigger presence in emerging Asia economies, which it hopes will become its next major market besides Japan.

In Indonesia, SMFG is in the process of merging Bank Tabungan Pensiunan Nasional (BTPN) with its local unit, a move expected to raise the Japanese bank’s 40 percent stake in the lender to a majority ownership. It also holds a 15 percent stake in Eximbank in Vietnam.

“We are now studying what can be done in other Asian countries. We are not likely to build retail banking operations from scratch, so we are likely to buy local lenders,” Kunibe said without elaborating further.

He said the bank is also exploring acquisitions in other business areas, such as asset management and investment banking, where boutique M&A advisory firms could be potential targets.

While Kunibe sees strategic significance in buying a U.S. bank, it is not a high priority since deal prices would be too expensive, he said.

SMFG said earlier this month CFO Jun Ohta, who is currently the bank’s finance and strategy chief, would take over the top job in April, with Kunibe becoming chairman.

Effectively leading SMFG since he became the chief of its core banking unit in 2011, Kunibe carried out a structural overhaul of the financial conglomerate to focus on profitable businesses.

As a result, the bank now expects to have enough capital to meet stricter global capital requirements at the end of the current financial year through March.

“We do not intend to have capital keep piling up above necessary levels,” Kunibe said, noting SMFG could have around 1-1.3 trillion yen ($9-11.7 billion) in surplus capital in five years if it can keep generating profits at the current level.

“We will be in a stage where we will use (surplus capital) for growth investment and enhancing shareholder returns, he said. ($1 = 111.1800 yen) (Reporting by Taiga Uranaka and Taro Fuse; Editing by Muralikumar Anantharaman)